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Exelon Corporation (EXC), Arch Coal Inc (ACI), Dell Inc. (DELL): One Person’s Trash Is Another Person’s Treasure Portfolio

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Exelon Corporation (NYSE:EXC)Last November, I announced my intention to create a portfolio of 10 companies that investors had effectively thrown away and given up on, in the hope of showing that deep-value investing, and contrarian thinking, can actually be a very successful investing method. I dubbed this the “One Person’s Trash Is Another Person’s Treasure” portfolio and, over a 10-week span, I highlighted companies that I thought fit this bill, and would expect to drastically outperform the benchmark S&P 500 over the coming 12 months. If you’re interested in the reasoning behind why I chose these companies, then I encourage you to review my synopsis of each portfolio selection:

Exelon

QLogic

Dendreon

Dell

Staples

Arkansas Best

Arch Coal

Skullcandy

France Telecom

Xerox

Now, let’s get to the portfolio and see how it fared this week:

Company Cost Basis Shares Total Value Return
Exelon $31.25 31.68 $993.17 0.3%
QLogic $11.46 86.39 $818.11 (17.4%)
Dendreon $5.97 165.82 $664.94 (32.8%)
Dell $13.37 74.05 $996.71 0.7%
Staples $13.48 73.44 $1,151.54 16.3%
Arkansas Best $10.83 91.41 $1,766.96 78.5%
Arch Coal $7.03 140.83 $508.40 (48.6%)
Skullcandy $6.71 147.54 $774.59 (21.8%)
France Telecom $11.64 85.05 $818.18 (17.4%)
Xerox $8.16 121.32 $1,085.81 9.7%
Cash $0.06
Dividends receivable $77.55
Total commission ($100.00)
Original investment $10,000.00
S&P 500 performance 6.7%
Performance relative to S&P 500 (10.1%)

Source: Yahoo! Finance.

This week’s winner
Thanks to concerns about a potential credit crunch in China, and the somewhat imminent paring back of QE3 by the Federal Reserve, it wasn’t easy to find a gainer last week. Taking the top honors was electric utility Exelon Corporation (NYSE:EXC) with a paltry 2.2% gain on the week. Despite no company-specific news, the reasoning behind the move higher is pretty easy to understand. Exelon Corporation (NYSE:EXC) is a necessity stock in that supplies energy, which will remain in fairly steady demand regardless of whether or not we dip back into another recession. With somewhat predictable cash flow, it’s a wonderful safety net for investors to turn to in times of uncertainty.

This week’s loser
Conversely, with China’s Shanghai Composite swooning as much as 15% in a span of five days, commodity stocks absolutely took it on the chin. For the third-straight week, Arch Coal Inc (NYSE:ACI) was the worst performer, shedding another 12.6%, and is now down nearly 50% from late January. The thesis here is that, if China’s growth slows because loans aren’t available, then demand for coal and other materials will fall. Arch Coal Inc (NYSE:ACI)’s growth plan entailed forging export deals to China and Southeast Asia, so China’s slowing growth is certainly a concern.

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